Lululemon Case Summary
Lululemon Tops Earning Estimates, Stock Price Rebounds
Lululemon Athletica (NASDAQ:LULU) shares spiked almost 4.54% after beating analysts’ revenue and earnings estimates by a wide margin of $4.17 million and $0.04 per share, respectively. The company’s revenue surged 13% to $544 million compared with the revenue of $479 million in the same period last year. Its total comparable sales increased 7%, while direct to consumer revenue surged 16% over the year-ago period.
Above all, Lulu’s operating income soared almost 36% in the third quarter, relative to the same period last year. In our recent article, we strongly suggested investors to consider buying LULU’s stock on the recent selloff. A fresh rally in Lululemon’s share price and higher-than-expected
results validates our prediction.
Despite a fresh rally, LULU’s stock price still offers a solid buying opportunity, as its stock is currently trading almost 25% below from its 52-weeks high price of $80 a share. The company’s future fundamentals appear strong considering its potential to generate a massive growth in revenue and earnings.
Laurent Potdevin, lululemon's CEO, stated: "Our third quarter results demonstrated strong execution across all areas of our business as we delivered continued top-line momentum, outperformed in gross margin and inflected meaningfully in EPS."
The company’s cash generation potential has also been increasing, thanks to a sustainable growth in earnings. LULU ended the third quarter with $480.4 million in cash and cash equivalents, relative to $403.4 million in the same period last year. Its operating cash flows are also exceeding capital requirements, allowing it to returns significant cash to investors.
The company stock buyback program of $100 million of its common shares, will provide a support to its share price. Furthermore, Lululemon increased its guidance for the full year after solid results for the third quarter. For the full fiscal 2016, the company expects revenue to stand in the range of $2.340 billion and earnings per share are expected to be in the range of $2.23 for the full year.
Lululemon Athletica (NASDAQ:LULU) shares spiked almost 4.54% after beating analysts’ revenue and earnings estimates by a wide margin of $4.17 million and $0.04 per share, respectively. The company’s revenue surged 13% to $544 million compared with the revenue of $479 million in the same period last year. Its total comparable sales increased 7%, while direct to consumer revenue surged 16% over the year-ago period.
Above all, Lulu’s operating income soared almost 36% in the third quarter, relative to the same period last year. In our recent article, we strongly suggested investors to consider buying LULU’s stock on the recent selloff. A fresh rally in Lululemon’s share price and higher-than-expected
results validates our prediction.
Despite a fresh rally, LULU’s stock price still offers a solid buying opportunity, as its stock is currently trading almost 25% below from its 52-weeks high price of $80 a share. The company’s future fundamentals appear strong considering its potential to generate a massive growth in revenue and earnings.
Laurent Potdevin, lululemon's CEO, stated: "Our third quarter results demonstrated strong execution across all areas of our business as we delivered continued top-line momentum, outperformed in gross margin and inflected meaningfully in EPS."
The company’s cash generation potential has also been increasing, thanks to a sustainable growth in earnings. LULU ended the third quarter with $480.4 million in cash and cash equivalents, relative to $403.4 million in the same period last year. Its operating cash flows are also exceeding capital requirements, allowing it to returns significant cash to investors.
The company stock buyback program of $100 million of its common shares, will provide a support to its share price. Furthermore, Lululemon increased its guidance for the full year after solid results for the third quarter. For the full fiscal 2016, the company expects revenue to stand in the range of $2.340 billion and earnings per share are expected to be in the range of $2.23 for the full year.